Business Cash Advance vs Merchant Cash Advance

​How is a Business Cash Advance different from a Merchant Cash Advance?

In the world of small business finance, the term “Business Cash Advance” has been growing in popularity. Many business owners have heard of merchant cash advance and similar products, leaving them to wonder “what is the difference between a business cash advance and a merchant cash advance​?”. 

We will explore the similarities and differences of these products to paint a clarified picture of these financial products. 

The Similarities 

When we talk about both merchant cash advance and business cash advance, it is important to know that both products are in existence to allow a business to receive funding in exchange for its future sales.

This fundamental principle is what separates an advance from a traditional loan, and thus allows for faster funding with less paperwork. Both products are typically unsecured, meaning collateral is not necessary, and do not require good personal credit to qualify.

With this in mind, the risk is greater on the lender and will result in a more expensive product than a traditional loan. The primary benefit of an advance is the ability to receive the fastest injection of working capital to your business with substantially less paperwork and hassle!

The Differences

Now that we have covered the similarities of merchant cash advance and business cash advance, let’s discuss how they are different.

When your company repays a merchant cash advance, you will be using a percentage of your company’s credit card sales on a set payment schedule (i.e. daily, weekly, monthly).

The capital company who funds your merchant cash advance may require that you use a credit card processing company that works with their platform.

This means that you may have to change the merchant processing company you are working with in order to meet the requirements of the advance, adding time and paperwork to receive the funding you need.

A business cash advance sidesteps the need to use your credit card sales as the method of repayment by using a percentage of your sales debited directly from your business bank account.

The payments will be pulled on a set schedule, as with the merchant cash advance, but does not require you to alter your current arrangement with your merchant processing company. This is a great benefit to companies that do not process credit cards as part of their business plan or who prefer cash/check based sales.

Which One Is Right For Your Company?

While business cash advance and merchant cash advance share many similarities, the key differences create two unique products that serve specific purposes.

We at Small Business Capital U.S. understand the importance of selecting the right financial product for your growing business. It is our mission and duty to serve our customers with information and transparency.

In doing so, we aim to create informed clients with the knowledge and resources necessary to make the best financial decisions for their businesses. Our mission is our passion. Give us a call, or click on the "Get Started" button below to continue your journey towards business growth today!

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Small Business Capital US

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